Marketplace - It’s beginning to look a lot like Christmas … online

Episode Date: November 15, 2024

We may be two weeks out from Thanksgiving, but online retailers are already locked in on holiday shopping season. While brick-and-mortar stores might not have flashy displays up yet, online shops decked the virtual halls over a month ago. Also in this episode: Houses of worship go all-in on solar energy tech and some small banks are in desperate need of technology updates.

On the program today, the economic news you might have missed given, you know, everything from American public media. This is Marketplace. In Los Angeles, I'm Kyle Rizdall. It is Friday today. This one is the 15th of November. Good as always, stab you along, everybody. The headlines are all politics all the time.

Yes, sure, fine. But there is nonetheless economic news aplenty, which is why we are here. Amara Mokwe is at Bloomberg. Rachel Siegel is at the Washington Post. Hey, you two. Hi, Kai Kai. So Amara, let me start with you. And it will be, let's see.

Yes, I will go with inflation first of all. CPI came out this week 2.6% year over year, obviously just above where the Fed wants it to be. But the question is, does it seem to you like disinflation, that is a reduction in the rate of inflation, seems to be stalling out? It seems to be sort of leveling off. Yeah. I think people would have liked to see a little bit more progress in the recent inflation

numbers we've got, CPI and PPI, this week. And I think you saw Fed officials kind of acknowledging that. We had a course of Fed officials speaking this week. And you heard a lot of them talking about this need to cut rates gradually, carefully. Chair Powell said yesterday that the committee is not in any kind of hurry to cut rates. And I think that just reflects the fact

that they feel like they have more work to do on inflation. And also there's a lot of consideration about sort of uncertainty around this idea of the neutral rate and how far the Fed has to cut to get there. And Chair Powell and others have said they kind of don't know where the neutral rate is. So that sort of injects some uncertainty into what the path of policy might look like going forward. Since you said the words neutral rate, you now have to explain in something less than

20 seconds what the neutral rate is. I think I can do it. So the neutral rate is a Fed policy stance that neither sort of promotes economic growth or inhibits it. And right now, Fed officials feel like their policy rate is above that neutral stance. So it's having a restraining effect on the economy. And because we've made progress on bringing inflation down to their 2% target, they don't feel like they need

to be in this restrictive stance, which is why they're cutting rates. But they also don't want to cut too much and risk reigniting inflationary pressures. And so since there's some uncertainty around where the neutral rate is, some of them believe that it's probably higher now than it was pre-pandemic.

There's uncertainty about how much they need to cut and how fast they kind of need to go. And if the neutral rate is indeed higher, Rachel, it suggests that whatever the Fed is doing now is not restraining the economy as much as they might have thought. Let me ask you this though, Rachel Siegel. Powell said yesterday to Katharine Pell,

one of our Friday regulars here, as we all know, and your colleague at the Washington Post, he said, look, we know what the factors are that are inhibiting inflation from coming down even more than where we want it to be, right? Housing, insurance. And so really, Powell basically said, look, we just got to sit on our hands a little bit here, right? Yeah. And in some ways, that is a familiar message that we're used to hearing. Yeah. And in some ways, that is a familiar message that we're used to hearing from him. Like, he's actually quite, he's quite committed to this idea of leaving lots of options open, not, you know, prescribing what they're going to do in the next meeting or the meeting after that. Just in the last couple of months, we've seen them shift quite, you know, dramatically,

relatively speaking, from needing to cut a lot to saying that they can slow down a little bit. They have a lot of uncertainty flying their way, especially with this new election, with so much unknown about Trump's incoming policies that, you know, even as they're trying to figure out what that final destination of neutral is, there's a lot that they're juggling in the meantime that is going to make him very unlikely to commit to something really firm. So, all right, so Mara, let's talk about the new administration, the new old administration. One of the things we can be reasonably sure that is going to happen is that there will be tariffs put into place in this economy, varying percentages and varying applications.

Catherine Rampell did, though, ask Chair Powell yesterday about his tariff actions in 2018 when Powell said, listen, this is going to have a really big impact versus now when he's asked. Powell has said, yeah, we don't quite know. We got to wait and see. I wonder what that's all about. Yeah. I mean, I think first, I think Powell doesn't want to weigh too far into politics, right? So he's saying, look, we're going to wait until we have more clarity on what the policies

are before we talk about how it might influence our policy decisions. But I think also the inflation picture now is just quite different than it was during the first Trump administration. So back in the first Trump administration, we had had low inflation for a long time. And the concern back then was actually that inflation was sort of consistently undershooting the Fed's 2% target. And now we've had recent years where inflation was high, and the Fed is still trying to get inflation down to its 2% target and now we've had you know recent years where inflation was was high and the Fed is still trying to get inflation down to Its 2% targets. I think I was just acknowledging that we're just like in a fundamentally different world

When it comes to inflation and I think a big part of their inflation fight is inflation Expectations and those have changed a lot too because we did go through this inflationary period Whereas back in the first Trump administration Americans weren't thinking a lot about inflation. Now they are, now they do. And so the question of keeping people's inflation expectations anchored and making sure that people believe that the Fed can get inflation under control, all of that is much more relevant now than it was back then.

Inflation expectations aside, Rachel, we saw again today that the American consumer continues to do their bit in this economy. Retail sales up way more than anybody expected. One does have to wonder, and I know I've said this like for the last umpteen freaking months or years, how long can the consumers last? It continues to astound me. No, it's incredible.

And it's also incredible that you can have these continued strong metrics that are still set against the way people feel about the economy. We saw the election, I think, as one of the strongest markers yet of real discontent around the ongoing lingering effects of inflation, people feeling that their pocketbooks weren't going very far, even though, as you just said, they're continuing to spend, we're going into the holidays, it's expected to be another strong season. I think this is just still part of this constellation that we've been talking about for a long time of things that seem like they could be at odds with each other, but clearly are not in a way that continues to challenge

policymakers' understanding of where the economy is headed, even without big shocks or these big policy changes that, you know, they're're gonna know they have to steer through anyway. It's just amazing that the picture doesn't really seem to get all that much clearer even as the months tick by and the economy still continues to forge back. But Rachel, why? We're now well post-pandemic,

but the things that are happening, people keep going, yeah, she's weird out there, man. Yeah, it is weird out there. And if I had an answer, maybe I would be in line for the Nobel Prize. And instead, I want to put the question right back to you because I think it's one that continues to stump even people like Powell, right? And I don't think that you would hear top policymakers say that they're even assured that it will absolutely always continue this way.

So I know that it is so weird out there and possibly only going to get weirder, but it's the data that you have at any given moment that you can make a decision off of. It is kind of amazing. Rachel Siegel at The Washington Post, and Mara Mokwe at Bloomberg on this Friday, finally. Thanks you two. Have a nice weekend. Thanks, Guy. Wall Street, today the post-election bounce gang seems to be over. We will have the details when we do the numbers. All right, Atini a little bit more now on retail sales, specifically what the Census Bureau calls non-store retailers, which is a very not online term for online

shopping. We spent 7% more on non-store retail last month. That's compared to a year ago, and it is the biggest year-on-year jump of any of the spending categories that the Census Bureau tracks. Marketplace's Matt Levin breaks down what's been happening of late in the e-commerce economy. Olivia Johnson noticed a new aesthetic on Dick's sporting goods website when she was recently doing some online shopping for a pair of Air Jordans. I think it was like green streamers on there with red ornaments.

Johnson researches retail and consumer science at the University of Houston. She says for online retail, the all important holiday season now basically starts October 1st. That's partly because putting a Santa GIF on your website is a lot easier than finding an employee willing to let five-year-olds tug on their fake beard all day. Not to mention clearing the showroom for that tree and chair.

In stores, you have to set the store, right? You have to tell a story with your merchandising, but you have the ability in these online spaces to start that holiday shopping earlier. Justin Perdue Plus, online retailers have all kinds of personalized data to target holiday early birds. Hey, we noticed you're one of those bizarre people who bought an advent calendar before Halloween last year. You want another one? Declan Gargan at S&P Global Ratings says many retailers doubled down on online promotions in October as a way to grab attention. This fall, those

commercials enticing you to come to the store had competition. A lot of that kind of advertising gets crowded out by a lot of the political advertising. So we're just seeing retailers do what they can to signal value. And for inflation-weary consumers, it's often easier to bargain hunt online. Gregory Dacco is an economist with EY. In a high-price environment where consumers have more financial difficulties, they're going to want to compare different prices for similar goods. And doing that online is of course much easier.

Although no matter how cheap they might be or jolly the advertisements, some of us are just not gonna buy holiday gifts before November. I'm Matt Levin for Marketplace. Your mileage may vary on this one, but consumers generally don't seem to be enjoying themselves as they go about their banking. A report from Forrester Research not too long ago showed bank customers' opinions of the banking customer experience have been declining for three years in a row now. And that's got a lot to do, it turns out, with the

kinds of technology that banking is all about today. Some banks make it really easy to transfer money or pay off a credit card. Others, very much not so much. The report from Forrester also found customers' opinions of their banking experience is going to keep on declining if banks don't invest in upgraded technology. As Marketplace's Justin Ho reports, small banks, in particular, see those upgrades as something of a business imperative. Over the last year, a community bank in New Canaan, Connecticut, called Bankwell, set itself the goal of making more loans to small businesses. But Ryan Hildebrand,

the bank's chief innovation officer, says the loan approval process was taking way too much time. We would have to have a conversation with them, you know, trade emails, texts, phone calls, visits in person, and then be able to pull together a paper application to be able to say if a business can be loaned to or not. So last spring, the bank started partnering with a tech company to speed up its loan application process by using artificial intelligence. Now after an applicant enters a few details on the bank's website,

We connect to their bank accounts. We are able to understand what their tax returns look like, what industry they're in, to be able to make a quick high level pre-qualification decision. As a result, Hildebrand says the bank achieved its goal. It's been making more loans because the whole process is just smoother. David Schiff with FTI Consulting says AI tools can also help banks price their loans more competitively so they can turn applicants into actual borrowers. To make sure that you get all the way through underwriting and through close

with customers because the rate doesn't feel too high. They're not shopping around as much. Schiff says small banks are starting to use AI in a bunch of other ways, too. Deposits, loan collection. But so are big banks. Christian Rupp, chief innovation officer at Colony Bank, a community lender based in Georgia, says his big national competitors have invested a lot in customer service technology. And it's only going to continue to become easier for them because technology is making customer service easier.

Rup says that's making it harder for him and other smaller lenders to compete. That's because they have traditionally relied on personal relationships to bring in clients. The idea that a community banker will pick up the phone when a customer calls or that it might lend to a local business with unique needs. But ROOP says as better technology has helped big banks get better at serving customers, those small bank advantages have started to wane. More and more you're hearing from customers, look, we really want to work with you guys, but just so you know, it is really hard for us to do what we need to do when your app won't let us do X, Y, Z.

That means that many smaller banks feel like they don't have a choice but to upgrade. If we don't make this investment, we will cease to be relevant. Robert James II is the CEO of Carver Financial Corporation, a company with two community banks in Georgia and Alabama. He's in the middle of upgrading their entire digital platform, everything from making it easier for customers to transfer money between accounts to letting them use the bank's debit cards in Apple Pay and Google Pay. James has a big motivating factor is that his current customer base is aging. And we want to make sure that we have the ability to serve those customers kids who may not have accounts with us. James says his bank has a responsibility to stay relevant because it predominantly serves black customers in Georgia and Alabama, who have

historically had a much harder time gaining access to credit and other banking services. There's only 23 black controlled banks in the United States, and two of them are a part of Carver Financial Corporation. If we don't exist, then there are customers that otherwise would not have access to these critical financial services. James says the hope is that the new technology will help the banks get bigger, letting them invest in even more tech upgrades in the future.

I'm Justin Ho from Marketplace. Coming up. I heard a saying where it says how you start is not necessarily how you finish. You gotta believe. But first, let's do the numbers. Yeah, the Wah-Wahs. Dow Industrial is off 305 points today, about 7.10% closed at 43,444. That, however, is not why we got the wah-wahs. This is. The Nasdaq off 427 points, 2.25%, 18,680. S&P 500 down 78 points, 1.3% landed at 58.74. The five days going by, the Dow off 0.7%. The Nasdaq down 2.2% of percent. S&P 500 contracted 1.3 percent today. Palantir Technologies surged more than 11 percent today.

The analytics and data mining firm is expected to be in trading on the NASDAQ next week. That's a change. Applied Materials slumped 9.2 percent today. Yesterday, the chip-making equipment company forecast quarterly revenue below estimates. That is weak demand aside from AI-powered chips. Rival KLA dipped about four and three quarters of 1%. The Chinese e-commerce giant Alibaba dropped two and two tenths percent today after posting worse than expected quarterly revenue.

Yes, that is sluggishness in the Chinese economy that you see happening. Bond prices went down, thus the yield on the 10-year treasury went up 4.44 percent. You're listening to Market Plus. Money, money, money. Kids always have questions about it, and maybe you do too. That's why Million Bazillion, the webby-winning podcast from Marketplace, is here to answer the awkward and sometimes surprising questions your kids have about money. We explain concepts like savings accounts, retirement, and the differences between brand names and non-brand

names. Million Basilian is the place for you and your kids to learn about money together. We help dollars make more sense, get it? Listen to Million Basilian wherever you get your podcasts. This is Marketplace. I'm Kyle Rizdall. If you wanted to put solar panels on your roof, there is federal money in the Inflation Reduction Act to help you do that. The money's there for now. The president-elect has, of course, talked about repealing or reversing many of the green energy programs that the Biden administration has put into place.

That money, though, is not just for homeowners. It's for businesses, too, also nonprofits. And one slice of nonprofits in particular is taking advantage, houses of worship. Churches and mosques and synagogues and temples are three times more likely to have solar on the roofs than the average non-residential building. That is according to the U.S. Department of Energy. And the impact those panels are having is way bigger than the power that they generate, as Marketplace's Kaylee Wells found out.

A Shabbat service is the typical soundtrack of a Friday afternoon at Temple Bethom. Above the heads of the worshiping congregants, the sun is about to set on dozens of solar panels that since last year have adorned the roof. to set on dozens of solar panels that since last year have adorned the roof. Whatever space we had, they put panels. Art Mercado is director of facilities, the guy in charge of the keys and the doors that led up here. I think the goal was to be environmentally green, cost effective, and obviously in the long run is have more money for the school, the temple, and everything else. Just about every sun-bathe surface of this synagogue and the gymnasium of its school next door

is covered in panels. They're designed to supply about half of the power used on this campus, which should slash about four grand off of its monthly electric bill. Temple Beth-Ahm is part of a solar trend that Daniel McIntyre sees as a business opportunity. He runs a company called Tenco Solar that installs panels. We had never done a job with a nonprofit prior to the Inflation Reduction Act being passed. Now he's done four churches, a Sikh temple, an Islamic center. Solar is catching on in part because the Internal Revenue Service gives money directly to nonprofits to make climate friendly changes to their buildings.

Instead of taking it as a deduction on your tax return, you actually receive that back in the form of a check from the Department of Treasury or IRS. So Temple Beth-Ahm had a financial incentive from the Inflation Reduction Act, an environmental incentive, and it turns out a moral incentive too. In Judaism, you know, there's this whole concept of repairing the world and there's a responsibility to the world, right? Mark Samuel served as president of the temple while the solar panels got installed. He says the community has gotten rid of styrofoam cups and started composting at the school. You know, the kids are saying, hey, you know what,

mom, dad, I learned about composting and this is what I did today. Why don't we do this at our home as well? Samual calls the composting program and now the solar panels appetizers, ways for families to explore what they can be doing to help the planet too. I get phone calls about it. How'd you do it? What are you doing? Is it difficult? Is it worth it? Does it really work? That is the part that is most exciting to Kenneth Gillingham. He's an environmental economics professor at Yale. He says the environmental effect of Beth-Am solar panels extends far beyond the

temple's own energy use. How many solar adoptions there are around you is one of the most impactful factors that influence whether you install solar. The idea is called social contagion. In this case, a good contagion. Gillingham co-wrote a study about it that said solar panels tend to cluster in neighborhoods. They're like quiet working ads for themselves because You're more likely to actually talk to your close neighbor, find out the financials for the system, find out that they're seeing the solar panel as a good deal.

A community center like Beth Am, where 1,000 families come to learn and shape their beliefs on what's right and wrong, magnifies that effect. So if you're a church or temple, has a very large congregation, then you may actually reach many people you wouldn't have reached otherwise. The synagogue's reach extends far beyond LA. Mark Samuel, the former president, says he got a call from a remote congregant in Texas asking about the solar panels. In Los Angeles, I'm Kaylee Wells for Marketplace. Matt Levin, up earlier in the program, was telling us about how non-store retailers, online shops of course is the translation there, he was telling us how they're doing these days. But what about those brick and mortar places, huh? We called one of them

Chandra Turner, owns the bougie grazer in downtown Atlanta, Georgia. I heard a saying where it says how you start is not necessarily how you finish. So we started in charcuterie, but now we've gotten a lot of corporate grace tables and more so box lunches and catering. So it's transformed into something a little bit different from just your standard charcuterie boutique. ["Sweet Home Alone"] your standard charcuterie boutique. Right now, I am only taking orders of 30 or more, and that is to eliminate some of the spoilage.

I was seeing last year that a lot, I was probably wasting like 30 percent of fruits and vegetables that you know I couldn't use because they would either go bad or I didn't have an order form so now that I'm taking on the bigger orders I'm able to use a lot of my products in that same day. So I, right now I have five total team members. Taking on a payroll cost also is, you know, has been interesting because I've never, you know, had to continuously have like payroll. It was always just one-off events, but now week over week, I'm having to steadily pay a payroll

and I'm just like, oh, okay, this is different. So at the end of the year, my lease is up on my studio. This is my first brick and mortar, so it's bittersweet. I don't know if I'm gonna transition out and go into a smaller space or I don't know if I am going to to stay there and re-sign the lease. So it's a really big decision but I'm sure that my spirit will tell me exactly what to do with my first brick and mortar, which has been definitely an interesting and fun and exciting ride for the last 15 months. Chandra Turner, the bougie grazer, is her shop. Atlanta, Georgia is her city. This final note on the way out today in which the road to electric vehicle adoption remains

bumpy. CNBC reported and General Motors later confirmed that it's going to lay off another thousand people, both salaried and hourly hourly workers as it leans into making more but also money losing electric vehicles. GM has earlier said it's shooting for about two billion dollars in cost cuts. Our theme music was composed by BJ Liederman, Marketplace's executive producer is Nancy Fargollon, Donna Tam is the executive editor, Neal Scarborough is the vice president and general manager, and I'm Kyle Rizdall. Have yourselves a great weekend, everybody.

We will see you again on Monday. All right? This is APM. Money, money, money. Kids always have questions about it, and maybe you do too. That's why Million Bazillion, the webby-winning podcast from Marketplace, is here to answer the awkward and sometimes surprising questions your kids have about money. We explain concepts like savings accounts, retirement, and the differences between brand

names and non-brand names. Million Bazillion is the place for you and your kids to learn about money together. We help dollars make more sense, get it? Listen to Million Bazillion wherever you get your podcasts.